Accenture identified weaknesses in its consulting division and projected overall lower-than-expected quarterly sales, indicating pressure as businesses put off business improvement initiatives in the face of a shaky economy.
Spending on IT and transformation initiatives is returning to normal after a boom during the epidemic as businesses observe a slowdown in growth.
According to a recent note to clients from Piper Sandler’s lead analyst Arvind Ramnani, companies are giving higher priority to projects with shorter timelines and higher returns on investments.
Accenture expects sales for the current quarter to be between US$15.20 billion (A$22.7 billion) and US$15.75 billion (A$23.5 billion).
According to Refinitiv, the midpoint of the guidance is less than the analysts’ projection of US$15.61 billion.
Concerns for the industry are raised by a weaker projection from Accenture, which is known as the IT services and consulting bellwether.
Cognizant Technology Solutions cut its revenue and adjusted earnings forecast for the entire year ending December 31 last month, citing rising expenses and contract cancellations.
According to Julie Bhusal Sharma, an equity analyst at Morningstar, there would be a lower demand for new consulting contracts in the fiscal year 2023.
Sharma continued, “We believe that prudence will prevail overall, delaying decision-making, and that expenditure would be softest in smaller purchases over larger deals.
Accenture’s first-quarter revenue and profitability were greater than anticipated, but the warning overshadowed them.
Sales increased by 5% to US$15.7 billion in the three months that ended on November 30. This was higher than the analysts’ average forecast of US$15.58 billion and took into account a stronger-than-expected 9.5 percent negative impact from a strong currency.
